Blowouts? No. The NBN is very much on track

analysis Last week the majority of Australia’s media reported that the National Broadband Network Company’s corporate plan showed it had blown its budget and was running late. But the truth is that the document actually paints a picture of a sensible and mature operation which is hitting almost all of its targets.

If you’re at all interested in the NBN, you couldn’t have missed the hundreds upon hundreds of articles written last week by Australian and international journalists about the release of NBN Co’s new corporate plan. And almost universally, they were all along the same theme — screaming of disaster and woe, cost blowouts and delays, catastrophe after catastrophe. You have to wonder what new labels of hyperbole would be applied to an actual catastrophe — one that wasn’t a “First World Problem”.

With all of this flotsam and jetsam clogging the public stream, I wanted to sit back a bit before I analysed the NBN’s new corporate plan released this week and give the plan a bit of room to breathe and the nation’s commentators some time to run out of steam on NBN Co’s new corporate plan before I put my own thoughts down on the matter. This morning I went through the plan in detail. I sat down, and over an hour and a half, read right through the full 96 pages of NBN Co’s new document guiding its future over the next three years. And I have to say, what I found in those pages seems quite remarkable.

Let’s start off with the headline claim: That NBN Co has “blown” its budget, which was the line which almost all of the media ran with last week. The amazing thing is, that this generated so many headlines, when from a financial perspective it’s actually hard to justify this claim by looking at NBN Co’s new corporate plan.

The basis of this claim is the corporate plan’s disclosure that the capital expenditure cost of building the NBN’s infrastructure has risen by 3.9 percent, from $35.9 billion to $37.4 billion.

Now, speaking as a business owner and someone who has covered technology projects for the past decade, I have to say that a change of 3.9 percent in any direction is within the margin of error for any technology project. And when that project involves deploying tens of billions of dollars worth of fibre-optic broadband infrastructure around an entire nation … by a company which was only set up several years ago from scratch? I’d personally consider it absolutely amazing that the project’s capital costs as a whole are within 3.9 percent of their projected figure — and I’d expect any project manager worth their salt to feel the same way. We’re talking billions upon billions of dollars of estimates here. The fact that NBN Co is still within a few percentage points of those estimates, several years down the track, is nothing short of remarkable, and I’d challenge anyone to find a project this size which has remained this close to its original cost estimates.

This is especially the case when you consider the incredible changes which have taken place in NBN Co’s strategic approach to construction over that period. The most obvious would be the incorporation of the ability to gain access to and use vast portions of Telstra’s network and the addition of Optus customers onto its back from the telco’s HFC network, but there’s also the changed Point of Interconnect model due to the unexpected ACCC decision, which went against the Government’s and NBN Co’s views on the issue. Then, too, NBN Co has changed its deployment model to an ‘opt-out’ structure and has a huge an ongoing negotiation with greenfields housing estates on how it will deploy its infrastructure in those regions. And the list goes on.

In short, NBN Co has, over the first few years of its life, suffered a continually changing policy and commercial negotiation landscape which has forced it to change many of its construction assumptions on an ongoing basis. And yet, despite this, it has managed to keep its overall projected capital expenditure costs within 3.9 percent of its original projection. Incredible.

There is also the question of whether this level of capital expenditure cost increase even matters.

Although NBN Co is planning to spend several billion dollars more on its network rollout, last week’s corporate plan showed that it is still planning to make a long-term return on the Government’s investment in it of 7.1 percent — and that figure actually increased slightly in the latest Corporate Plan, despite the huge amount of change in the project’s underlying assumptions and policies. Any investor will tell you that it’s not how much money you put into a project which matters — but how much you get out afterwards. Given that getting access to a few extra billion dollars — hell, tens of billions — of cheap extra debt is no problem for a government the size of Australia’s with our stellar credit rating, this makes the return on that investment a much more pertinent financial benchmark than capex — and on this measure, NBN Co continues to stay very financially stable and on track.

When you take into account the fact that vast social and productivity benefits will accrue to the nation from having universal fast access to broadband, and add to that the fact that last week’s Corporate Plan showed deploying that broadband is still eventually make a small amount of money for the Government, the rationale behind the NBN’s business case continues to remain incredibly strong. An infrastructure investment which will eventually pay for itself, with significant additional non-financial benefits. That’s the definition of good policy.

The second major claim is that the NBN is delayed by six months. In part, the corporate plan makes clear, this is true: NBN Co has not been able to commence fibre rollout in some areas simply because it lacked the necessary detailed network information; information which was only provided in Telstra in march this year, after the negotiations between the pair of telcos took nine months longer than expected. Now, there is a legitimate case to be made that NBN Co and the Government should have anticipated that, given its incredible complexity, the Telstra deal would take a long time to be finalised.

But again, here the nature of the situation has been portrayed by most of the media to be far worse than it actually is. For starters, NBN Co is currently projecting that the completion of the fibre components of its network will be delayed by six months, not nine months — in short, that the network will be completed by June 2021, instead of December 2020. This alsodoesn’t tell the whole story. Other areas of NBN Co’s infrastructure rollout — for example, its satellite and wireless services and its backhaul transit network linking up cities and regions — have been speeding ahead in the meantime, and will be completed over the next several years. NBN Co hasn’t been standing still waiting for Telstra to give it the green light in every area — far from it. While the lawyers have been arguing, the rest of NBN Co has been locked in hyper-acceleration mode.

You can see this by looking at other areas of activity within the company over the past several years. The Corporate Plan makes clear, for instance, that the massive Business Support and Operational Support Systems which sit at the heart of NBN Co’s network have already been deployed — a gargantuan undertaking for any telco, let alone one as complex as NBN Co.

NBN Co has signed up almost every telco in Australia — representing 94% of the fixed telecommunications market — to use its services going forward. It now has 1,620 employees, permanent offices in every major city, its own datacentres, construction and equipment contracts covering all of Australia and so on … the list goes on endlessly.

The overwhelming impression that you get from NBN Co’s new Corporate Plan is one, as its chief executive Mike Quigley has said, of an active, operating company which is moving ahead at full speed with its business. This isn’t the startup company of 2009, nor even the uncertain company of 2010, still finding its feet. In 2011, I believe, NBN Co turned into a frenetic ant’s nest of work, and its tentacles now extend out into every area of Australia’s telecommunications sector.

Now, most who analysed NBN Co’s corporate plan didn’t ever get beyond these two headline issues — the “cost blowout” and the “delays”, which NBN Co and Communications Minister Stephen Conroy disclosed right up front last week when the plan was released.

But when you delve a bit deeper into the plan, anyone who is enthusiastic about the future of telecommunications in Australia will find a huge amount of to be optimistic about.

Take, for example, NBN Co’s disclosure of the fact that there are now 500 NBN-based retail plans in the market from 41 retail Internet service providers, giving consumers a huge variety of choice when it comes to their NBN broadband connection. Or the fact that those plans have tended to focus at two speed levels — 25Mbps, for cost-conscious consumers, and 100Mbps — for everyone else, who wants to take advantage of the full NBN speeds. Or the fact that broadly, those plans are very similarly priced to current prices on ADSL, an inferior broadband technology.

Take, for example, the fact that NBN Co is experiencing a higher take-up higher speeds than it has previously planned for, meaning that the company’s pricing packages are proving successful in the market, and that there is stronger demand for faster speeds than NBN Co has been projected. This means, over the long term, that if this trend continues that NBN Co will actually be able to reduce its wholesale prices due to it making increased revenue, which should correspond to a decrease in retail broadband plans by ISPs.

Take, for example, the fact that over the next year hundreds of thousands of Australian premises will have access to fibre, hundreds more access to fixed wireless and satellite broadband, and that by the end of 2016, that figure will be close to four million for fibre and a million for fixed wireless and satellite — five million premises which will have massively better broadband than they had access to before. And the corporate plan points out that NBN Co’s ‘volume’ rollout is now under way, with all of the years of preparatory work behind it.

Now, if I had any criticism of NBN Co’s corporate plan, it would be that I don’t believe it’s as detailed as it could be.

Most of the figures contained in it, for example, aren’t broken down into the level which most telecommunications analysts would like. We don’t get to see much behind the curtain of headline “capex” or “opex” costs. We don’t get to peek into NBN Co’s expense statement to see what has changed, line by line. And we don’t get to examine its projected revenues per customer or per product line. And this, to some commentators, will make NBN Co’s plan hard to stomach. When so much has been left out, to what degree can we take its statements as fact?

Neither have we been able to get this level of detail on similar private sector projects. When Telstra rolled out its Next G network, it never completely disclosed how much it spent on the implementation, and Optus isn’t saying how much it’s spending on its 4G network now. We didn’t get to see how much every line item cost PIPE Networks in its submarine cable to the United States, and we don’t get to see now how much that network makes it. In short, what NBN Co’s corporate plan represents is a level of detail unprecedented when it comes to the reports which I’ve seen of major technology projects in Australia.

And yet, having read through the entire document, I find it very hard to find areas to criticise NBN Co on it. Where things have gone wrong or been delayed, NBN Co has provided an explanation for them. Where things have been better than expected, NBN Co has also explained that. It has laid out what it expects to do, and is conscious of the need to deliver on those targets. There are governance controls in place, accountability measures — this isn’t a wild horse let off the leash: It’s a carefully, managed, well-structured project delivered by calm-headed people who appear to believe strongly in what they are doing and are champing at the bit to deliver on their company’s goals.

Last week, Liberal MP Paul Fletcher wrote that if NBN Co was funded by private sector investors, its chief executive Mike Quigley would “probably have been fired by now”.

But the truth is, as was also true of his tenure at his previous employer, Alcatel-Lucent, that by all indications Quigley has been managing NBN Co in an exemplary fashion. Its corporate plan shows that he’s keeping NBN Co on track despite extraordinary external pressures and a constantly shifting landscape. At the moment, the project displays all the right signs of being able to deliver on the aims it was set up for — and within its original projected financial guidance, providing the financial returns it originally envisaged.

Maybe it’s too much to expect from Australia’s media at the moment that it represents what NBN Co does accurately and in context. But for my own part, I’d like to pass on my congratulations to the company for keeping things on an even keel so far. Contrary to most media reports, NBN Co isn’t drowning — it’s waving. And I believe as its volume rollout gets into gear over the next several years, many currently critical of the project will be forced to realise just how sound its governance has been.

Compare NBN to the Jindalee over the horizon radar project. I remember someone teaching project management describing that as an absolute case study in how to not manage a major project. Years late, massive cost overruns, didn’t deliver what it was promised. *That* was a major failure. The NBN, not so much.

It’s actually a pretty amazing system. No idea about the management aspects of it. From the wikipedia:

“The JORN is so sensitive it is able to track planes as small as a Cessna 172 taking off and landing in East Timor 2600 km away. Current research is anticipated to increase its sensitivity by a factor of one hundred beyond this level.[11] It is also reportedly able to detect stealth aircraft;[4] aside from the fact that most stealthy aircraft are optimized for defeating much higher-frequency radar from front-on rather than low-frequency radars from above, JORN is reputedly able to detect aircraft wake turbulence. Project DUNDEE[20] is a cooperative research project, with American missile defence research, into using JORN to detect missiles.[21] The JORN is anticipated to play a role in future Missile Defense Agency initiatives, detecting and tracking missile launches in Asia.[22]

A significant use of the JORN is the detection of boats landing on the northern shores of Australia.[11]”

” Telstra, in association with GEC-Marconi, became the prime contractor… By 1996 the project was experiencing technical difficulties and cost overruns. Telstra reported an A$609 million loss and announced that it could not guarantee a delivery date”

lol take it from me — there is *zero* chance of an online media outlet winning one of those things — they always go to newspapers ;) Plus, they don’t really give credit to the sort of stories I write — more just the big scoops which end up on the front page and result in some politician resigning over a sex scandal ;)

However, I really appreciate the sentiment — I read every comment on Delimiter and on social media, and take what you guys say very seriously — it means a lot to me!

“The basis of this claim is the corporate plan’s disclosure that the capital expenditure cost of building the NBN’s infrastructure has risen by 3.9 percent, from $35.9 billion to $37.4 billion.”

The keyword here is “build drop”: more fibre to be put in now rather than later -> higher cost now rather than later.
…
And yet, despite this, it has managed to keep its overall projected capital expenditure costs within 3.9 percent of its original projection. ”

Yep. And also the fact that $37.4b capex is still much lower than the original estimate of $43b….

My question is how does build drop translate to the media claims NBNco have *changed to opt out*?

All build-drop needs [presumably] is a reasonably high acceptance rate [see 6.2.3 of corporate plan] – this can be achieved via opt-out or opt-in. Conversely not doing build-drop can be achieved using an opt-out or opt-in system.

The question isn’t so much what you are doing, but how the media sourced their information. Did you get requests asking if build-drop equated to opt-out? Did you release this information somewhere I’ve missed? Etc.

A build drop involves connecting the fibre from the street to the house during the construction phase rather than at some later date when a person orders a service which makes it an efficient and effective way to roll out the fibre network because it minimises disruption in local communities and saves taxpayers’ money.

It also makes it quicker and easier for a householder or a business owner to order a service when the network is up and running.

But clearly if a householder doesn’t want it we’re not going to force it on them.

As you can see, the NBN tail terminates into the green block – when you need the NBN service and NTD installed, they remove the rubber plug from the top of the green termination block and plug a fibre patch lead into it and then run it to where ever you want the NTD installed.

The Build drops are opt-out, you get them unless you explicitly say no.

That said NBN Co (and Telstra) under the comms act (iirc) have the rights to enter your property and install/access comms gear on your property without your permission – if it involves a shared MDF (eg for a block of flats) then they also have the right to enter the premises where the MDF is located without your permission.

As I have commented on whirlpool, build drop is not ‘opt out’. NBN still requires consent of the homeowner to connect to the NBN. It has been annoying the crap out of me that we continue to see claims of ‘opt out’ everywhere in the media, including in this article of Renai’s

“As I have commented on whirlpool, build drop is not ‘opt out’. NBN still requires consent of the homeowner to connect to the NBN. It has been annoying the crap out of me that we continue to see claims of ‘opt out’ everywhere in the media, including in this article of Renai’s”

I would agree, but after Scott [from NBNco] didn’t make that distinction TWICE after I explicitly pointed it out… I figure it’s a lost cause.

Because you are still not connected to the NBN? All the objections to ‘opt-out’ is over whether it gives the proper choice to the home owner for their communications requirements. Build-dropping does not change this

I don’t think you understand where I am coming from djos.
The common criticism of ‘opt-out’ is that it limits consumer choice as to whether they have an NBN connection or not. The media in generally is playing on this by describing the build drop process as being ‘opt-out’. Therefore I am arguing that the build drop process is not opt out as the consumer still has to explicitly subscribe to get the outside box connected to their internal house wiring via an NTD.

I think that the confusion between opt in and opt out for the drop comes from the initial plan.

IIRC what was trialed was all premises being notified of the NBN passing and requesting permission to connect the fibre to the premises from the street. If they didn’t reply or refused permission then no connection was provided from the street. (ie opt in)

The Tasmanian Government decided, I assume with NBN Co help, that the NBN should be allowed to connect to all premises unless the owner specifically requested no connection be made and I think passed legislation to this effect. (opt out) The Victorian government made noises about legislating to require the opt in system but I am not sure whether they actually passed it.

In talking about connections I am referring only to the cable run from the street to the box from which the connection will be made to the internal works not the actual internal works which is done after an application for service is made to an RSP which of course is purely opt in

There is so much detail here, its clear that they are on top of everything that can be reasonably expected of them, and then some.

What would happen if they were shut down?

You’d lose that business structure that appears to be working so well, so what fills the void? Assume the Coalition wins the next election and shuts NBN Co down, SOMEONE will need to fill that role in a caretaker role at least, for 2 to 3 years while existing rollout contracts are honored.

SOMEONE needs to pay the bills. SOMEONE needs to report progress. SOMEONE needs to do this, and that, and something else. All on a daily, weekly, monthly, quarterly, and yearly basis – both calender and financial year at that.

Who would that someone be, and what would the cost be of transitioning from NBN Co to them?

NBNCo. wouldn’t be shutdown under any model I don’t think. At worst (and it’s still epically bad) it would be sold off. Shutting it down after spending nearly $7 Billion on it would be…..gargantuanally stupid is all I can think of to call it…..

“When you take into account the fact that vast social and productivity benefits will accrue to the nation from having universal fast access to broadband…”

Which benefits are these? Is there somewhere like a CBA that I can find a sensible, reasoned, maybe costed set of expected benefits which will accrue from building the NBN?

“Take, for example, the fact that NBN Co is experiencing a higher take-up higher speeds than it has previously planned for, meaning that the company’s pricing packages are proving successful in the market, and that there is stronger demand for faster speeds than NBN Co has been projected.”

Sample size is pretty darn small still. If it swings back toward the lower end of the spectrum for the next few years, won’t that pretty much bust their costings, and require more funding (cost blowouts)?

Gah it’s hard to find distortions / omissions whatever when you know a lot of it comes pretty plainly from the document itself. I think it comes down to the fact that this analysis is more in line with what the corporate plan had to say. Which should mean that this is closer to how many others should have reported it I would think.

I think its fair to emphasise the issues nearer the bottom of this article, as you really do have to just “trust” that the numbers in the report itself are accurate estimates. They would flunk Physics 1 as they don’t show working, even if the results happen to be right. But then I’m sure NBN Co are bound by any number of commercial non disclosure type agreements.

Yeah I was trying to do a fact check Renai from an anti-NBN point of view, but failed dismally really. All I really have is that there is no CBA to show any benefits he claims, and that his analysis depends on you believing the Corp Plan. As it is, he pointed out the main weakness with the plan is that it is somewhat opaque still.

““Take, for example, the fact that NBN Co is experiencing a higher take-up higher speeds than it has previously planned for, meaning that the company’s pricing packages are proving successful in the market, and that there is stronger demand for faster speeds than NBN Co has been projected.”

Sample size is pretty darn small still. If it swings back toward the lower end of the spectrum for the next few years, won’t that pretty much bust their costings, and require more funding (cost blowouts)?”

No. Despite sample sizes being arguably small the breakdown of demand so far shows an exceptional shift towards the top end of the plans available. The actual demands are closer to being upside down to what NBN Co have modelled. They’ve accounted for this by plugging in the actual numbers and immediately tapering them off back down to very close, if not exactly, to their original pessimistic estimates. In short, they haven’t materially adjusted their forecast to account for reality. Things would have to swing very hard and very fast to come anywhere near the forecasted numbers.

Correct me if I’m wrong but Telstra and Optus market share of BB combined is greater than 70%. Can’t find the numbers on short notice. Neither of them are providing a 12 mbps service (with one or two minor exceptions). NBN Co is still forecasting approx 50% of users to take 12mbps services.

“The business case remains extremely conservative” — and that, by itself with no other consideration, says that the NBN has a real chance of delivering above expectations, if only in the short to mid term.

After that, its a moot point because we’ll be on the platform regardless, and its only a matter of future needs vs capacity.

If your business model is based on modest returns, then anything better only increases the bottom line profits.

NBN have already signed up 94% of Telcos. then all of Optus and Telstra fixed line retail business is to be rolled over to the NBN in due course as part of their deals.. NBN will has an extremely good business case as a result.. Sign ups isnt a problem.. Even in the interim areas, the sign ups and speed selections are above expectations.

Thats right, Telstra and Optus currently have around 72% of the total market between them in broadband. iinet, TPG, iPrimus, exetel, SkyMesh etc. make up around 25% and the rest is filled by the littler guys.

So yes, the business case is quite conservative. Ironically, all this “blowout” of costs would’ve actually likely been a DROP in costs without the unforeseen time to negotiate and USO and Greenfields extra requirements. I think over the next few years IF the NBN is allowed to continue as is, we’ll see a series of progressively LOWER costings (not necessarily massive, but significant) over successive Corporate Plans.

Let’s get one thing straight. NBNCo had predicted that it would have passed 317,000 by June where in reality, we don’t have close to a quarter of that. Connections were predicted at 25K and similarly, we don’t even have a quarter of that.

What we do have however is four staff working at NBNCo for every subscriber.

Imagine what the cost blowouts would have been if delivery had been closer to 100% of the targets for connections?

“Those predictions had assumptions – such as the telstra deal. Those assumptions changed, so the prediction’s changed.”

What you and this article fail to recognise is that NBNCo is well behind schedule with the targets set to complete the next stage of work being even more ambitious than those achieved to date. The reasons for that, as understandable as they may be are irrelevant to this discussion.

What is relevant is that despite being so behind schedule and subsequently having completed a fraction of the work targeted by this time, it still managed to be over budget to the tune of billions. So, proportionate the premises served, the 3.9% figure can only be fairly considered “within the margin of error” if all other parameters also remained “within the margin of error” which that have not.

In effect, NBNCo has completed 25% of the work scheduled to be done by this stage and it has cost 3.9% more than estimated to complete all of it. Within the margin of error? Don’t think so.

Those costs are to run extra fibre and save other future costs. They changed to build drop where every house has fibre run to it. It cost an extra 1.4B but in the long run saves more in ongoing running expenses than it costs.

So what you’re saying is that the delays are a result of NBN failure in their methods, desite the mountain of evidence saying otherwise.

What changes under the Liberals when they have to start again? Negotiations with Telstra dont happen overnight.

If the Liberals put a plan up stating it’ll be 5 years before the first person gets connected to their contribution to a NBN, and it takes that long, is that a pass or failure? That would be 5 years the Labor plan could be moving along.

As for the 3.9%, try learning to read the article. Show us just one major infrastructure project that has come in so close to initial estimates (actually it was secondary estimates – initial estimates put this cost change still lower than expected).

“What you and this article fail to recognise is that NBNCo is well behind schedule”

Well behind?

The NBN is ~6 months behind on a ~10 year schedule – that’s about 5%.

“with the targets set to complete the next stage of work being even more ambitious than those achieved to date. The reasons for that, as understandable as they may be are irrelevant to this discussion.”

Irrelevant? NBNco has a strategy to ‘ramp up’ production… that’s very relevant if you claim that the next numbers are more ‘ambitions’ than the first!

“What is relevant is that despite being so behind schedule and subsequently having completed a fraction of the work targeted by this time, it still managed to be over budget to the tune of billions.”

You seem to have a misunderstanding.

NBNco did not miss it’s forecasts badly and waste billions doing so. What happened was the plan changed. Instead of starting roll-out at X it had to start nine months later. Instead of dropping fiber to the premises on demand we are now doing build drop. We also have 121 PoI, the Optus deal, have more fiber to actually roll out etc.

So yes, the PLAN has changed, the START dates have change – but you’re confusing that with the build results.

Let’s say you’re driving from Chatswood to the city. Normally, it takes you 20 minutes but today you find that the bridge is closed and you’ve got to go the long way. Now it takes you 45 minutes. You’re saying that’s your fault and you should have planned better?

“Yes, I consider missing a target by over 50% well behind.
NBNCo claim that it’s 6 months behind due to the Telstra/Optus deals. Let’s see in 6 months if NBNCo are to where they need to be now, shall we?”

Hold your horses. There’s an awful lot of considering going on and not a lot of comprehension.
At this stage of the rollout NBN Co are 9 months behind schedule. They are forecast to have caught up 3 of those months by the end of it.

What does the number of staff working for NBN Co have to do with the number of subscribers?

NBN Co. are building a network and I seriously suspect they need staff to do that, This has no relationship between the number of subscribers to NBN plans with RSPs and the number of employees of NBN Co.

Nice work Renai – it also shows how a specialist blog, with input from a diverse but generally far better informed readership, can inform far more usefully and accurately than traditional media.
I guess to some extent that explains why the market has left them to find voices such as yours, some of us need more than a ‘story’, we prefer evidence.

The mainstream media continues to disappoint and wonder why circulations are plummeting. Just as it did over weapons of mass destruction and now how government policy encourages risk taking by boat people http://goo.gl/LWBPF. But you won’t learn of this issue in the mainstream.

What impresses me is that you have consistently shown a desire to have balanced articles and the fact that you have struggled to find any substantial negatives reassures me that NBN co must, indeed,be doing a pretty good job.

A combination of laziness and a lack of relevant experience with this sort of project has prevented me from reading the whole document. So, I appreciate you took the time to do it and explain it in simple terms.

Great work as usual Renai. Not unexpected though :) The usual tripe from the MSM was considerably WORSE than usual after this Corporate Plan and I figured you’d want to do your own careful analysis before commenting….and you found what the most of the rest of us did. All the “blowouts” were well defined and, in many cases, unavoidable because of scope changes.

I truly hope we start to see some balance from the media on the NBN…..I am however taking a large bet on the Democrats making a surprise massive return in the next election…..I expect that to be several thousand times more likely….. :D

Delimiter lives in complete denial. The NBN itself has admitted they are behind schedule based on their own timetables, and the cost has exceeded the budgeted figure. These are facts. But your overwhelming sense of entitlement to a taxpayer funded NBN, blinds you to these simple facts. Instead you publish this nonsense. IT where overselling and under delivery are the norm.

NBNCo are behind schedule because the Telstra negotiations took nine months longer than planned. Costs have risen, but so has the scope of the plan. I trust you will opt out of the NBN altogether, sticking with PSTN/ADSL as long as possible, and then eschewing fixed-line technology altogether when the copper is removed?

I can see your comprehension skills have not improved. The article does not deny the facts, it attempts to explain them and in doing so tacitly acknowledge them.

You, on the other hand, are truly in denial with regards to the funding of the NBN.

You are also disingenuous in ignoring the reasons for the delay and additional cost.

In other words, you are truly to form. Never mind the reasons, they would get in the way of your simplistic argument, so let’s push the same BS.

In your quest to follow your political idols, you have missed an important fact. Their message which you happily repeat are not aimed at the knowledgeable, they are aimed at those that don’t know, don’t care and , I nearly forgot, devoted coalition supporters.

Any group which spouts a politicised position simultaneously claiming that NBN is costing too much, is not needed, is taking too long to build, will be supplanted by new technology ‘in a few years’, will be aborted as soon as they take power, and is not being rolled out fast enough or widely enough – is lacking in more than a bit of comprehension.

” The NBN itself has admitted they are behind schedule based on their own timetables, and the cost has exceeded the budgeted figure.”

I have been involved in many Telecommunications infrastructure builds over the years and a 10% cost over-run potential is built into most build contracts.
As for a six month time over-run is a project spanning a decade, you are joking right?

Given the unknown factors present at the start of this project, the only word to describe how close practice is to projections trult is amazing.

Am I alone in being frustrated that so many people are ignoring inconvenient facts? If you’re going to form an opinion, make sure it’s an INFORMED one. Were these people never taught to consider all sides of an argument first?

Pity we can’t see it reproduced in (at least) the Fairfax press. Years ago I had cause to talk to a lawyer about a minor issue that seemed insurmountable and his response was; ‘let’s look at it another way’. I did and left his office smiling…

It comes from the term that is used to signify what happens in oil drilling when the cap on the well gives way. Like BP in the Gulf a couple of years ago.

It describes huge amounts of oil spurting out and the complete destruction of any equipment on top of the well. In terms of in finances, It’s used to describe huge cost overruns….I’m not sure about you, but I’m pretty sure 3.9% increase of costs over 10 years couldn’t be considered a blowout…..the term was first used to describe this Corporate Plan by…..drumroll…..The Australian!

*Doesnt even bother looking surprised*

You could see the negative spin forming after the first idiot from the Australian asked his questions at the press conference. He just wouldn’t let it go….

These days the term is used to sensationalise just about any increase in cost where politics can play a part. Its not much different to someone screaming “IT’S GOING TO COST $2 BILLION MORE!!!” trying to scare people with a number they cant really comprehend.

As you say, 3.9% isnt a cost blowout, its an accepted variation on the original estimate. Its so far within reasonable limits its not funny. Even a 10% increase in costs isnt a huge deal. Not when plenty of other projects, both public and private, blowout to the tunr of 100% or more.

The ATO’s change program was originally expected to cost about $400m, yet in the end cost nearly $900m… Thats what a blowout is refering to, not a paltry 4% increase above original guesses.

If anything, 3.9% should be applauded for being so close. It reflects the attention put into the original plan, and how much effort went into getting things right before a single step was taken. It demonstrates that The Plan is based on information that can be relied on, something you cant say about a lot of other projects…

Problem is imo Markie, these people are entrenched in the old ways, where they have made their $b’s and just want it to keep ticking over with minimal effort.

The print media (especially with their pay TV arms) as such, find the NBN a threat, rather than like Telstra (of all unlikely candidates) who are finding new ways to profit whilst offloading costly obsolescence!

…but once built it’ll be sold off…
But my point about the print media benefiting was more from the aspect of information retrieval and transmission as an aid to productivity. For instance during trials last year in Caroline Springs – a greenfields suburb just out of Melbourne – a graphic designer was able to send ready for press files to his (ink and paper) printer in around 30 minutes which would normally have taken 10 hours.
Now that’s what I would call productivity!
As far as the threat to traditional papers is concerned your point is no longer valid. In the case of the Age all their classified ads – once their bread and butter income – has gone online.
This being in spite of the fact that they were warned some years prior…who remembers the little ICPOTA character these days?

Digital delivery takes so many costs out of their business: newsagents, printers, paper, distribution. Ubiquitous high bandwidth lets advertisers bring their targeted messages to their audiences in ways not possible with paper and ink. You would think they would be at the sharp end of NBN lobbying. It also deliver COMPETITION the holy grail of LNP thinking. Trouble is when competition comes it can be a case of be careful what you wish for.

Remember how long it took the record companies to realise pretty much the same thing while their business model was being ravaged by pirates. And then it was something from the computer industry itself — iTunes — which delivered salvation.

Thing is, had the new plan had a decrease in CAPEX (so a fully inflated rather than a blow out…LOL) then of course NBNCo would have still been criticsed by the usual suspects for “obviously’ either now lying to make the NBN sound better than it actually is, or for supplying incorrect initial projections, therefore casting doubt over their compotency and then of course, they’d be accussed of being unfit to manage such a large project *rolls eyes*

We’ve already seen them hone in on the increase in cost and the hold-ups, whilst bluntly refusing to even factor why these have occured (exactly as predicted they would days before…LOL).. dear oh dear.

So NBNCo really can’t win and never will.

The same old whingers will always, even if completed, paid for and a complete success, still complain that the money would have been better spent here or there, the speeds aren’t that fast after all, there’s no value and they will of course say it was all a ‘wasteful white elephant’.

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